Glossary of Terms - Property Value
Definitions are referenced from various governmental real estate sites,
IAAO
Par Value
The face value of an item of intangible property that has both a stated face value
and a fluctuating market value; applied especially to corporate stocks.
Parallax
The apparent displacement of position of a body with respect to a reference point
or system of coordinates, caused by moving the point of observation.
Parameter
Numerical descriptive measure of the population, for example, the arithmetic mean
or standard deviation. Parameters are generally unknown and estimated from statistics
calculated from a sample of the population.
Parametric Statistic
A statistic whose interpretation or reliability depends on the distribution of the
underlying data.
Parcel
A contiguous area of land described in a single legal description or as one of a
number of lots on a plat; separately owned, either publicly or privately; and capable
of being separately conveyed.
Parcel Identification Number
A numeric or alphanumeric description of a parcel that identifies it uniquely. Assessors
use various systems, many with common features. A growing number of these systems
include geocoding. In the thirty states where it exists, the Public Land Survey
System, authorized by the United States government in 1785, is often a basis for parcel identification.
Parcel Identification System
The scheme by which parcel identifiers are generated. Parcel identifiers are constructed
from elements relating them to surveying systems, map projection systems, map-page
numbers, and geographic areas.
Parcel Identifier
A code, usually numerical, representing a specific land parcel's legal description.
The purpose of parcel identifiers is to permit reference to legal descriptions by
using a code of uniform and manageable size, thereby facilitating record-keeping
and handling. Also called parcel identification number.
Partial Equilibrium Analysis
An analysis of one unit of the economy in light of constraints imposed by economic
forces outside the unit. An example would be a highest and best use analysis of
vacant land where the land use is limited by zoning.
Partial Exemption
The amount of otherwise-taxable assessed value removed from tax liability by constitutional
and/or statutory action. Examples of partial exemptions are those for qualifying
homesteads, veterans, and senior citizens.
Partial Interest
An interest (in property) that is less complete than a fee simple interest.
Partial Payment Factor
"Also known as the "amortization" or "periodic repayment" factor. The equal periodic payment that has a present worth of $1, for a specified number of periods and at
a specified discount rate.
Partial Taking
Taking of part rather than all of real property by means of eminent domain. Compensation
will be both for the part taken and for any loss of value affecting the remainder.
Patent
(1) The exclusive right granted by a government for a limited period to an inventor,
his or her heirs, legatees, or assigns, to make, use, and vend an article or process
invented by him or her. (2) The instrument by which government lands are granted
to private persons under the proceedings set forth in the general statutes. See
also land, patented.
Percent Condition
The difference between observed physical depreciation, expressed as a percentage
of original or reproduction cost, and 100 percent.
Percent Good
An estimate of the value of a property, expressed as a percentage of its replacement
cost, after depreciation of all kinds has been deducted.
Percent of Cost
A technique of valuation by establishing the ratio of the sale price to the cost
new of an asset at the time of sale. With sufficient data, similar property can
be analyzed statistically and relationships developed between age, selling price,
and cost; it is logical then to estimate value by determining the current cost of
the subject and applying the appropriate percentage.
Percentile
The values that divide a set of data into specified percentages when the data are
arrayed in ascending order. The tenth percentile includes the lowest 10 percent
of the values, the twentieth percentile includes the lowest 20 percent of the values,
and so forth.
Performance Ratio
A ratio of the income of an investment to its cost that reflects historical performance
of the investment.
Perimeter Sketch
A graphic presentation of the boundaries of a property, either the land or the buildings
on the land.
Personal Judgment
Courts may issue a personal judgment against the defendant in a delinquent tax suit.
This judgment holds the person named in the suit personally liable for a delinquent
property tax and exposes his or her personal assets to payment of the obligation.
Phase I and II Reports
Used for properties that may be affected by contamination. Phase I reports include
historical information about the subject property and the neighborhood, and a review of pertinent government records to determine any prior violation pertaining to hazardous
wastes or substances. This report requires physical inspection of the property.
Phase II reports are required when potential problems are identified in the Phase
I study. Phase II is an in-depth study of groundwater, air, soils, and improvements,
to determine existence of any hazardous waste or substance, or other contaminant.
See environmental assessment.
Photogrammetry
(1) The art and science of obtaining reliable measurements by means of photography.
(2) The making of maps based on aerial photographs taken under rigidly controlled
conditions.
Photomosaic
An assemblage of photographs, each of which shows part of a region, put together
in such a way that each point in the region appears once and only once in the assemblage,
and scale variation is minimized.
Phototriangulation
(1) The determination of horizontal or vertical coordinates from measurements of
angle, distance, or coordinates of points on overlapping photographs. (2) The method
by which horizontal or vertical control is determined from measurements of angle,
direction, or coordinates of points on overlapping photographs.
Plat
A map intended to show the division of land into lots or parcels. Upon recordation
with the appropriate authorities, land included in the plat can thenceforth be legally
described by reference to the plat, omitting a metes and bounds description.
Plot
(1) A relatively small area of land, generally used for a specific purpose. (2)
A measured area of land; lot.
Plottage
(1) Those factors of size, shape, and location with reference to other plots that
add or detract from the value of a plot for a given purpose (preferred). (2) The
assembling of adjacent parcels of land into a single unit. (3) The excess cost of
assembling adjacent parcels of land into a single unit under single ownership over
the estimated cost at which such parcels might be acquired individually by independent
purchasers. (4) plottage value. Note: Because of the variety of meanings attached
to this term and its derivatives, it is suggested that the more descriptive term
"assemblage" and its derivatives be used to convey all of the above meanings except
the first. Compare assemblage.
Plottage Value
(1) The increment of value ascribed to a plot because of its suitability in size,
shape, and/or location with reference to other plots (preferred). (2) The excess
of the value of a large parcel of land formed by assemblage over the sum of the
values of the unassembled parcels. Compare assembly value.
Point Estimate
A single numerical value that can be used to estimate a population parameter. It
is calculated on the basis of information collected from a sample. Point estimates
are generally constructed to provide the best unbiased estimate of the population
parameter consistent with the sample data. However, the point estimate is only an
estimate, and is unlikely to have the same value as the population parameter. (See
Confidence interval and Reliability for discussion of precision of the sampling
process.)
Points
Prepaid interest on a loan; one point is equal to 1 percent of the amount of the
loan. It is common to deduct points in advance of the loan, so that an individual
pays interest on 100 percent of the loan but gets cash on, say, only 99 percent.
Pooled Regression
Combining two or more strata to form one regression model.
Population
All the items of interest, for example, all the properties in a jurisdiction or
neighborhood; all the observations in a data set from which a sample may be drawn.
Position
A numerical or other description of the location and orientation (attitude) of a
point or object. In particular, in geodesy and navigation, (a) data that give the
location of a point in a specific coordinate system, (b) the place occupied by a
point on the earth, (c) the coordinates giving the location of a point on the geoid
or ellipsoid.
Positioning System
Generally, a system (equipment, procedures, and personnel) used for locating a vehicle
or, less frequently, an instrument. A navigation system can also be used for positioning,
but a system designed specifically for positioning generally gives more accurate
locations.
Potential Gross Income
The sum of potential gross rent and miscellaneous income, that is, the income from
rent and other sources that a property could generate with normal management, before
allowing for vacancies, collection losses, and normal operating expenses.
Potential Gross Rent
The total rent a property would produce if 100 percent occupied at market rent.
Power of Attorney
A written authorization in which one person gives authority to another person to
act on his or her behalf.
PRD
See price-related differential.
Precision
The level of detail in which a quantity or value is expressed or represented. It
can be characterized as the number of digits used to record a measurement. A high
level of represented precision may be used to imply a greater level of accuracy;
however, this relationship may not be true. Precision also relates to the quality
of an operation or degree of refinement by which results are obtained. A method
of measurement is considered precise if repeated measurements yield the same or
nearly the same numeric value. See also accuracy and statistical precision.
Preferred Capitalization Rate
(1)
The capitalization rate applicable to the band of investment financed
by preferred stock. (2) A component of the overall direct capitalization rate calculated
by dividing dividends by the market value of preferred stock.
Present Worth
(1) The value of something after discounting future payments and receipts. (2) The
present value of income that is expected to be received at some future date or dates,
as ascertained by the process of discounting both the income and the anticipated
expenses incident to its receipt, that is, the amount of money that, if presently
invested and allowed to accumulate at compound interest, would yield net income
in the same amounts and at the same intervals as is anticipated of a given property.
Synonymous with "capital value" and "present value."
Present Worth of 1
(Also called the reversion factor.) The lump-sum amount that would have to be set
aside to accumulate with compound interest to $1 at the end of a specified number
of years and at a specified rate of interest. Alternatively, it can be viewed as
the present value of $1 receivable at the end of a specified number of years and
discounted at a specified rate.
Present Worth of 1 per Period
(Also called the annuity factor, or Inwood coefficient). The present worth of a
series of payments of $1, receivable at the end of each year, for a specified number
of years and at a specified interest rate.
Price Equilibrium
In a specific period, that price at which the quantity that buyers want is exactly
equal to the quantity that sellers want to sell.
Price Per Square Foot
The result of the Sale Price divided by living area square footage. (see living
area)
Price-Earnings Ratio
(P/E)
The ratio of the market price per share of the common stock of a specific company
to the earnings per share of common stock of that company during a twelve- month
period. Typically, the ratio is based on the current market price and the most recent twelve-month period for which earnings are known. This ratio is the reciprocal of
the earningsprice ratio (E/P).
Principle of Anticipation
The appraisal principle that value depends on the expectation of benefits to be derived in the future.
Principle of Balance
The principle of balance as used in appraising is that the greatest value in property
will occur when the type and size of improvements and uses are proportional to each
other as well as to the land.
Principle of Change
The principle of change asserts that all markets are in a continual state of change.
According to this principle, properties generally go through the three stages of
integration (development), equilibrium (stasis), and disintegration (decline).
Principle of Conformity
The principle of conformity states that the value of a group of properties will
rise to its highest possible level in an area where architectural styles are reasonably
homogeneous and surrounding land uses are compatible with the use of the specified
properties.
Principle of Contribution
The principle of contribution requires an appraiser to measure the value of any
improvement to a property by the amount it contributes to market value, not by its
cost.
Principle of Progression
The principle of progression holds that the worth of an inferior property is increased
by its proximity to better properties of the same use class.
Principle of Substitution
The principle of substitution states that
no buyer will pay more for a good than
he or she would have to pay to acquire an acceptable substitute of equal utility
in an equivalent amount of time.
Profit and Loss Statement
An accounting statement that shows the income and expenses of a business over a
specified time.
Progressivity
See assessment progressivity (regressivity).
Property
(1) An aggregate of things or rights to things. These rights are protected by law.
There are two basic types of property: real and personal. (2) The legal interest
of an owner in a parcel or thing (see bundle of rights).
Property Residual Technique
A technique used to estimate the value of a property from a knowledge of its net
operating income, discount rate, remaining economic life, the amount of the reversion,
and the income path attributable to the property over the holding period (generally
the remaining economic life of the property). The technique estimates total value
by discounting anticipated income and adding the result to the present worth of
the reversion.
Property Rights
See bundle of rights.
Property
Split
A result of the sale of property held by a single owner such that different pieces
of the property are owned by different owners. Splits may or may not occur along
plat lines. Assessors need to monitor splits not only to ensure the correctness
of the property listing, but also to monitor the land and its adequacy as a lien
against past and present tax liabilities.
The annual property tax owed on this property. Such taxes may include County,
School, Town, Village, City or Special District. Purchasers of properties
need to investigate the actual cost of taxes and also determine if reassessments
have been completed on properties.
Property Tax Levy
(1) The total amount of money to be raised from the property tax as set forth in
the budget of a taxing jurisdiction. (2) Loosely, by extension, the millage rate
or the property tax bill sent to an individual property owner.
Property Tax Levy Limits
A form of tax and expenditure limitation, applicable to all local governments in
the state, in which an upper limit is placed on either the proceeds of the property
tax or the rate of growth in the proceeds of the property tax.
Property Tax Policy
Any purposeful course of action by governmental bodies that affects or determines
the way property taxes are created, levied, collected, or spent. Property tax policy
issues can include determining the division of responsibility between local and
state/provincial governments, equalization, appeals, public relations, reappraisal
systems, the market value standard, exemptions and abatements, fractional assessments
(ratios), and limits on taxes and assessed values.
Public Land
Survey System (PLSS)
A rectangular survey system established in the
United States
by the Land Ordinance of 1785. The basic survey unit is the six-square-mile township.
Townships are located by baselines and meridians parallel to latitude and longitude
lines; they are defined by range lines running parallel (north-south) to meridians
and township lines running parallel (east-west) to baselines.
